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What is financial planning?

Well, I'll tell you what it's not. It is not investing in the next hot stock (or Bitcoin). In fact, that's not really even investing. That's called speculation.

True financial planning is an ongoing disciplined process where you make logical and well thought out steps to help you achieve your financial goals.

Now, a good comprehensive financial plan does have an investment component. It has to as money is required to meet financially based goals such as retirement or sending your kid to college.

It also includes a risk management piece to help protect you if something bad happens.

Estate planning is also important so your wishes are carried out in the event you become disabled or pass away too soon.

A tax component to help minimize your tax liability.

I've met many people over the years that think if they just get a high enough return on their investments, everything will fall into place. This may be true if we lived in a perfect world where no one ever got sick, died, lost their job, had any debt etc.

But we don't live in a perfect world. That's why we all need a comprehensive financial plan.

Recently, I had a new client come in and as we went through all of their documents, I noticed some discrepancies in their estate plan. Things just didn't match up. Their old advisor didn't even know about it. This doesn't mean their old advisor was "bad", it was just that this advisor didn't do comprehensive financial planning. He only looked at the investments. They didn't take a holistic view. The discrepancy wasn't an issue now while my client was alive and well but, it would be a mess if they became incapacitated or when they passed away.

A good financial plan doesn't guarantee nothing will ever go wrong but what it does do, is gives you a much greater sense of confidence, peace of mind, and a reduction in stress.

Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions,LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client.
Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.